Hyundai India IPO: Poised to break records as largest IPO in India

The Indian automobile industry is known for its fierce competition, constant innovation and rapidly expanding consumer base. Hyundai Motor India, founded in 1996 and a wholly owned subsidiary of the world-famous Hyundai Motor Company in South Korea, has been a major player in this industry ever since. 

The recent announcement of Hyundai Motor India’s intention to go public has caused significant waves in both the financial and automotive industries. This IPO is set to make a significant impact in India’s history, standing out from other listings. With top-tier advisors such as Kotak Mahindra Capital and Morgan Stanley leading the way, the company is considering an IPO size that has the potential to establish a new standard in the market.

This article will provide an in-depth analysis of Hyundai Motor India’s IPO, examining the company’s history, financial status, and the potential impact of this major development.

Also read: Rise of automobile industry in India 

Hyundai India IPO details

The initial public offering (IPO) for Hyundai Motor India is anticipated to consist exclusively of an offer for sale (OFS) by its parent entity. This move is projected to establish a new record as the most substantial IPO in the history of India. The South Korean auto giant aims to raise approximately $2.5 billion to $3 billion through this offering.

The Indian arm is expected to be valued at approximately $20 billion in the IPO. The discussions are still ongoing regarding the exact figure for the Offer for Sale (OFS), which is currently estimated to be around 15%. A number of factors, including the company’s strategy and the state of the market, will influence the final value and the size of the initial public offering (IPO).

The goal is to have the Hyundai Motor India IPO’s draft red herring prospectus (DRHP) submitted to SEBI, the Indian capital markets regulator, by either the end of June or the beginning of July.

The biggest initial public offering (IPO) in India right now is the Life Insurance Corporation of India (LIC) in May 2022, which raised an astounding $2.7 billion. Hyundai India IPO is poised to make history, making it the next-largest IPO. Hyundai’s fundraising would result in a valuation of its Indian operation that exceeds half of its market capitalisation of approximately $47 billion in Seoul.

Hyundai Motor Company has enlisted the expertise of Kotak Mahindra Bank Ltd. and Morgan Stanley to navigate the initial public offering process for its subsidiary in India. This strategic decision is made as the car manufacturer considers a listing that might emerge as one of the most significant in the history of South Asia. Citigroup, Inc., HSBC Holdings Plc, and JPMorgan Chase & Co. are also involved as key financial institutions in the endeavour.

About Hyundai Motors

Hyundai Motor India Ltd. (HMIL) is a significant player in the Indian automotive industry, functioning as a fully-owned subsidiary of the South Korean conglomerate, Hyundai Motor Company (HMC). Since its establishment in 1996, HMIL has been leading the way in offering intelligent mobility solutions, in line with Hyundai’s global vision of promoting progress for humanity and advancing a sustainable future through cutting-edge technology.

The 1998 debut of the Hyundai Santro marked the beginning of the company’s journey; the vehicle became well-known and solidified Hyundai’s position as a major participant in the Indian market. To meet the varied demands of Indian clients, HMIL has gradually increased the variety of models it offers. 

Its extensive inventory covers various vehicle types, from hatchbacks like the Grand i10 NIOS and i20 to sedans like the AURA and Verna, and SUVs like the Venue, Creta, and Tucson. Electric vehicles, such as the IONIQ 5 and the KONA Electric, are another way Hyundai is embracing the future of transportation.

Hyundai’s dedication to innovation and ensuring customer satisfaction is evident in its vast sales and service network, encompassing more than 1,366 sales and 1,548 service points throughout India. Hyundai maintains its dominant position in the market because to its wide reach, which makes the brand’s products and services easily accessible to customers.

With a 15% market share in India, Hyundai is the second-biggest automaker. This achievement speaks volumes about the enduring popularity and trust that Indian consumers have placed in the brand. The company’s success can be attributed to its wide range of products and its ability to meet the changing demands of the market. They offer reliable, feature-rich, and stylish vehicles that provide great value for money.

This chart represents the Hyundai Motor Ltd share price, the parent company. The Hyundai share price has given a return of 31.17% for the past 1 year period.

Also read: India’s auto component industry: A case study in innovation and excellence 

Financial position of Hyundai Motors

Let’s take a look at the quarterly financial position of Hyundai Motors, the parent company.

Source: Hyundai Motor Company Q1 2024 Business Results

With 6.02 lakh vehicles sold in 2023, Hyundai Motor India set a new record for yearly domestic sales in the country. This impressive accomplishment reflects a growth of 9% compared to the previous year. The company’s exports increased by 10% to 1.63 lakh units, up from 1.48 lakh units in the previous year.

Hyundai Motors India holds the second largest market share in the passenger vehicle (PV) OEM industry, with a valuation ranging from $22-28 billion.

Must read: EBITDA explained: Definition, calculation, significance, and more 

Bottomline

Hyundai Motor India, a prominent subsidiary of the South Korean conglomerate Hyundai Motor Company, has firmly established itself as the second-largest car manufacturer in India since its inception in 1996.

The proposed IPO, expected to be one of the largest in India’s history, underscores Hyundai’s strategic ambition and its confidence in the Indian market. 

Hyundai Motor India has consistently demonstrated strong financial performance and operational efficiency. The company’s recent quarterly results showcase a solid financial position.